{"id":978,"date":"2022-06-16T10:26:10","date_gmt":"2022-06-16T09:26:10","guid":{"rendered":"https:\/\/new.contentdeployment.co.uk\/quilter\/?p=978"},"modified":"2022-06-16T10:26:52","modified_gmt":"2022-06-16T09:26:52","slug":"are-mortgages-set-to-become-more-affordable","status":"publish","type":"post","link":"https:\/\/new.contentdeployment.co.uk\/quilter\/2022\/06\/16\/are-mortgages-set-to-become-more-affordable\/","title":{"rendered":"Are mortgages set to become more affordable?"},"content":{"rendered":"<div class=\"hd-block hd-block-paragraph\">\n<p><strong>In 2014,\nstringent mortgage affordability requirements were introduced by the Financial\nPolicy Committee (FPC) in response to the global financial crisis. Now, the\nBank of England (BoE) has launched a consultation<sup>1<\/sup> on the removal of\none of these requirements.<\/strong><\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>The first of the\ntwo requirements is a \u2018loan to income\u2019 requirement that sees lenders mostly\nlimited to offering 4.5 times an applicant\u2019s annual income. The second\nrequirement is an \u2018interest rate stress test\u2019, which calculates an applicant\u2019s\nability to repay their mortgage if interest rates were to rise.<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p><strong>The BoE\nconsultation<\/strong><\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>While the loan\nto income requirement looks set to stay, the BoE has launched a consultation\ninto whether the interest rate test could potentially be removed. Despite\nevidence of falling mortgage rates over the past decade, the test is based on\nthe average \u2018reversion\u2019 rate \u2013 i.e. the standard variable rate that borrowers\nare placed on following the end of a fixed-term deal \u2013 which has stayed largely\nstatic and is usually much higher than fixed-term rates. This means that\nborrowers must prove they can afford much higher repayments in order to take\nout a relatively cheap mortgage.<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p>The BoE\u2019s\nconsultation is due to close in May 2022.<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p><sup>1<\/sup>BoE, 2022<\/p>\n<\/div>\n\n<div class=\"hd-block hd-block-paragraph\">\n<p><strong><em>It is important to take professional advice before making any\ndecision relating to your personal finances. Information within this article is\nbased on our current understanding and can be subject to change without notice\nand the accuracy and completeness of the information cannot be guaranteed. It\ndoes not provide individual tailored investment advice and is for guidance\nonly. Some rules may vary in different parts of the UK.<\/em><\/strong><\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>In 2014, stringent mortgage affordability requirements were introduced by the Financial Policy Committee (FPC) in response to the global financial crisis. Now, the Bank of England (BoE) has launched a consultation1 on the removal of one of these requirements. The first of the two requirements is a \u2018loan to income\u2019 requirement that sees lenders mostly [&hellip;]<\/p>\n","protected":false},"author":12,"featured_media":979,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[32,76],"tags":[],"hd_content_source":[],"_links":{"self":[{"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/posts\/978"}],"collection":[{"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/comments?post=978"}],"version-history":[{"count":3,"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/posts\/978\/revisions"}],"predecessor-version":[{"id":982,"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/posts\/978\/revisions\/982"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/media\/979"}],"wp:attachment":[{"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/media?parent=978"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/categories?post=978"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/tags?post=978"},{"taxonomy":"hd_content_source","embeddable":true,"href":"https:\/\/new.contentdeployment.co.uk\/quilter\/wp-json\/wp\/v2\/hd_content_source?post=978"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}